We analyze the impact of changing employment patterns and pension reforms on
the future level of public pensions across birth cohorts in Germany. The analysis is based on
a rich dataset that combines household survey data from the German Socio-Economic Panel
Study (SOEP) and process-produced microdata from the German pension insurance. A
microsimulation model is developed which accounts for cohort effects in individual
employment and unemployment and earnings over the lifecycle as well as the differential
impact of recent pension reforms. Cohort effects for individuals born between 1937 and 1971
vary greatly by region, gender and education and strongly affect lifecycle wage profiles. The
largest effects can be observed for younger cohorts in East Germany and for the low
educated. Using simulated life cycle employment and income profiles, we project gross
future pensions across cohorts taking into account changing demographics and recent
pension reforms. Simulations show that pension levels for East German men and women will
fall dramatically among younger birth cohorts, not only because of policy reforms but due to
higher cumulated unemployment. For West German men, the small reduction of average
pension levels among younger birth cohorts is mainly driven by the impact of pension
reforms, while future pension levels of West German women are increasing or stable due to
rising labor market participation of younger birth cohorts.